Friday, February 1, 2013

Rid us of the gift that won’t quit giving

It’s hard to be upbeat about the economy when the effects of the Great Recession just won’t go away. It’s the unwelcome gift that won’t quit giving.
    During the boom in the housing market that preceded the crash of 2008, people believed that with housing prices rising at double-digit rates each year, they were making money in their sleep. It was a sweet dream that has become the nation’s recurring nightmare.
    Five years later, TD Ameritrade reports that the average baby boomer, who had been planning on home equity to shore up the golden years, is short on retirement savings by about a half-million dollars. Three-quarters of boomers say they will have to rely heavily on Social Security with an average benefit of $1,230 a month.
    To combat certain poverty, boomers who can are delaying retirement. Yet they are still saddled with debt incurred by spending home equity during the boom years and student debt that’s gone unpaid their entire working lives. Continuing to work may not be enough, and this could create staggering pressure to divert public funding to support for the old and ill.
    Boomers aren’t the only problem.
    The Pew Research Center reports that the U.S. birthrate at the end of 2012 was at the lowest in U.S. history. Women of childbearing age are having babies at a rate of 63 per 1,000—half the rate when baby boomers were born in the 1950s.
    Even with the economy improving, the birthrate isn’t bouncing back, and it’s causing economists to wonder if the decline is related to unprecedented levels of student debt. In 2011, student debt averaged $26,600 per borrower and students with postgraduate degrees carried even higher than average debt. Combine this with a 58 percent increase in student debt in the last five years and that spells crisis.
    How are we responding?
    In Idaho, public funding for Boise State University—the state’s largest—dropped from 33 percent of the school’s budget to just 18 percent over the past 10 years.
    Even worse, Idaho ranks 47th of the states in the number of high school graduates that go directly to college, and ranks 46th in the number that return for a second year. This is disgraceful when we know that higher education is the key to success for individuals and society.
    Individuals alone can’t face the multiple threats of a large population of poor elders, a declining birth rate and insufficient financial support for higher education. State and national leaders must quit making excuses and quit telling us that simple belt tightening will get us out of this mess. They must get going to devise state and national plans to rid us of the gift that won’t quit giving.

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